More than 3,600 employers have signed up to the living wage rate.
Photograph: Nick Ansell/PA

More than 150,000 workers will get an inflation-beating pay rise on Monday as the UK living wage, which is paid voluntarily by more than 3,600 employers, is increased against a backdrop of rising transport, food and housing costs.

The pay rate will rise 3.6% to £8.75 per hour around the UK and 4.6% to £10.20 in London, giving a wages boost to workers at companies which have adopted the measure, including Google and IKEA.

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Katherine Chapman, the director of the Living Wage Foundation, said the increase in the living wage was driven by inflation, currently running at 3%, and the increased cost of household goods, rents and transport. The living wage is independently calculated and designed to reflect the “real cost of living in the UK and London”.

“The new living wage rates will bring relief for thousands of UK workers being squeezed by stagnant wages and rising inflation,” Chapman said. “It’s thanks to the leadership of over 3,600 employers across the UK who are committed to paying all their staff, including cleaners and security staff, a real living wage.”

Dr Wanda Wyporska, the executive director of The Equality Trust, said: “It’s incredible to see so many of the UK’s largest businesses refuse to pay their staff a living wage. It’s even more appalling when you consider the average pay for a FTSE 100 boss is now over 300 times that of a minimum wage worker.”

The increase takes the voluntary UK living wage to £3.15 more than the mandatory minimum wage for 18- to 20-year-olds. The national living wage, which is simply the name given to the statutory national minimum wage rate for over 25s, is set at £7.50 an hour.

Chapman said the national living wage was not enough to cover the true cost of living, particularly in London. “In-work poverty is today’s story,” she said. “New figures show that 5.5m people are still paid less than the real living wage.”

Heathrow Airport announced on Monday it had signed up to the living wage, meaning more than 3,200 of its lowest-paid workers, including cleaners and security staff, will have their weekly wages raised by up to £100 a week. More than 150 employers have become accredited to the living wage in recent weeks including the National Gallery, the Southbank Centre and Somerset House. They join around 3,600 employers already signed up, including Nationwide and Diageo.

Sadiq Khan, the mayor of London, said he was delighted that the London living wage had risen above £10, but low pay and inequality remained problems in the capital. “London is one of the most dynamic and prosperous economies in the world, but unfortunately this prosperity isn’t shared by all Londoners. In the capital today, more than 2 million people are struggling to make ends meet and the ethnic pay gap is shockingly and unacceptably large.

“I want to make sure that no one who goes to work every day should have to endure the indignity of poverty. Paying the London living wage is not only the action of a responsible organisation, but a successful one too. Many of the accredited employers I speak to tell me of the increased productivity and reduced staff turnover that they’ve experienced since signing up.”